ADNOC’s distribution unit could raise as much as $2bn in IPO

Abu Dhabi National Oil Co’s (ADNOC) distribution unit set an indicative price range for its initial public offering (IPO) that could raise as much as $2bn to become the biggest listing in the UAE since 2007.

ADNOC Distribution set an indicative price range of between Dhs2.35 ($0.6400) and Dhs2.95 ($0.8034), it said in a statement on Sunday.

ADNOC is selling a minimum of 10 per cent, or 1.25 billion shares, and a maximum of 20 per cent, or 2.5 billion shares, in the IPO of its unit.

At the top of the price range, the deal could be valued at Dhs7.375bn ($2.01bn), assuming it sells a maximum 20 per cent.

That would make it the biggest IPO in the UAE since 2007 when DP World raised nearly $5bn, according to Thomson Reuters data.

The planned listing comes as Abu Dhabi is pushing its state companies to float on the bourse, hoping to lure foreign investors with privatisations after a fall in oil prices since mid-2014 depleted its coffers.

The unit’s total market value could be between $8bn to $10bn.

Analysts had earlier valued the total fuel distribution unit at between $11bn and $14bn in reports prepared by banks advising the firm on the planned listing, sources had told Reuters earlier.

The company valuation implies a 2018 dividend yield of 6 per cent to 7.5 per cent and a 2019 dividend yield of 4 per cent to 5 per cent.

ADNOC’s CEO Sultan Al Jaber said in the statement that the IPO’s price range was compelling and it was an attractive dividend prospect. Investors are getting a unique opportunity to invest in the UAE’s number one fuel retail brand, he said.

Under his leadership, ADNOC has embarked on a major shake-up plan to privatise its services businesses, venture into oil trading and expand partnerships with strategic investors. .

ADNOC Distribution is the leading fuel distributor in the UAE, with a market share of around 67 per cent in the country by number of retail fuel service stations.

Abu Dhabi’s national oil company earlier this month unveiled details of ADNOC Distribution’s listing, as Gulf states step up plans to privatise energy assets in an era of cheap oil.

Saudi Arabia plans to list 5 per cent of Aramco by the end of next year, which Saudi officials say could raise $100bn, making it the world’s biggest IPO.